COMMISSIONER OF INCOME TAX Vs. TAIKO CHANDER NAGAR CHEMICALS P LTD
HIGH COURT OF DELHI
COMMISSIONER OF INCOME TAX
TAIKO CHANDER NAGAR CHEMICALS (P) LTD.
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(1.) The Revenue is aggrieved by an order dated 15th December, 2006 passed
by the Income Tax Appellate Tribunal ('Tribunal'), Delhi Bench "A", New Delhi in
ITA No. 3100/Del./2004 relevant for the Assessment Year 2001-02.
(2.) The Assessee is a manufacturer of bleaching earth (also known as
Fuller's earth) which is used for purification of coconut oil. The Assessee also
exports Fuller's earth to Singapore and Malaysia. It appears that the Assessee
used to receive advances from the foreign buyers in foreign exchange to be
adjusted against the supplies to be made and that the Assessee was maintaining
some sort of a running account. It showed this amount in its balance sheet under
the head "Current liabilities". The admitted position is that although it
received the remittance by way of advances in foreign exchange in May and July
2000 it adjusted the advances partly against the supplies made for the period
1st April, 2001 to 31st December, 2001 and the balance against the sales made on
25th March, 2002.
(3.) As a result of the fluctuation in the rate of foreign exchange (US
Dollars), as on 31st March, 2001 there was an increase in the liability of the
Assessee as it would have been required to supply somewhat larger quantities of
Fuller's earth than what had been agreed to on the basis of prevalent rate of
the US dollars at the time of placing of the order. The Assessee treated this
as a trading loss. This was, however, not accepted by the Assessing Officer or
by the Commissioner of Income Tax (Appeals) ['CIT(A)'].;
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